Turo, the venture-backed peer-to-peer car rental service, reported fourth-quarter and full-year financial results in its latest IPO filing this week. The company initially filed an S-1 to go public in early 2022 and has since updated the document quarterly in preparation for an eventual public offering. TechCrunch covers regular financial disclosures and when a well-funded startup with a historic $1 billion valuation finally decides to pull the trigger and go public. provides insight into.
According to Pitchbook, Turo raised $250 million in Series E led by IAC in 2019, giving it a post-money valuation of $1.25 billion. Crunchbase counts Turo's total funding to date at only about $500 million.
The company has made effective use of capital and has recorded rapid revenue growth since 2019, positive operating profit from 2021 and net profit from 2022.
But Turo's growth rate has slowed in recent years, making the timing of an IPO difficult to estimate. If an initial public offering is not a significant priority, the company would not normally file his S-1/A application. In fact, it's a shame that, to my knowledge, no other venture-backed companies have implemented similar plans. But with technology valuations falling and hitting new highs in the 2021 era, choosing the right time to go public can be a challenge.
Just ask Reddit, which has been aiming to go public for years before filing this year, and the billion-dollar-plus startups flocking to the private market exit.
What will happen to Turo in 2023?
Turo posted revenue of $879.8 million last year, up 18% year over year. While the company's total revenue size is impressive, its growth rate has declined dramatically over the past two years. Turo's growth in 2021 rebounded nicely from the pandemic-induced hardships of 2020, increasing 213% on the year to $469 million. But his triple-digit growth for this car rental company didn't last long, with revenue growth slowing to his 59% in 2022, when total revenue hit his $746.6 million worth. .
Touro's year-over-year growth rate has slowed sharply in recent years, but the new filing contained a bit of good news for investors. According to TechCrunch's calculations, the growth rate from Q3 2022 to Q3 2023 was 13.6%, while the growth rate from Q4 to Q4 over the same period was slightly higher at 14.3%. I did. Both numbers are below the full-year growth rate, but even a slight acceleration in sales growth in the fourth quarter would make a case to public market investors that the slowdown is not necessarily irreversible. Could be helpful.
Still, the 18% growth rate isn't low enough to prevent Turo from going public, especially since it's so profitable that it could face investor concerns about a decline in its stock price. The company's gross profit margin declined slightly last year, dropping from 54.3% in 2022 to 51.4% in 2023.
Partly as a result of this lower gross margin, Touro's 2023 calendar profitability lagged behind its 2022 results. Last year's operating income was the lowest since 2020 ($13.7 million, down from $46.6 million in 2021), and net income was the lowest since 2021 ($15.6 million, down from $154.7 million in 2022). . Unadjusted earnings for high-tech companies about to enter the public markets are rare enough to make Touro stand out from the crowd, but considering slowing growth, potential public shareholders have no idea how much the company is worth. Whether the benefits will be commensurate with the benefits remains an open question.
Why not publish it now?
With net income and growth approaching $900 million, and a profitable business model, Turo is large enough to go public, and at a valuation of just over $1 billion, it shouldn't be too much trouble. right. Break the final private price tag.
So why not go public now? Perhaps the company is waiting for growth to pick up again, or perhaps it's simply investing in technology and technology so it can raise more cash with less dilution. They may be waiting for related earnings multiples to rise again. Or perhaps the company is waiting until investor appetite for tech IPOs returns, as its operations seem to be holding up.
There are reasons to be cautious, even if the continually updated S-1 still shows enthusiasm. One of his public companies, Getaround, has plummeted in value since going public in a SPAC-led combination. (To be fair, though, many SPAC-driven combinations haven't worked out.)
However, while we wait, there are a few other important things about Turo's updated S-1 that are worth noting.
EV: In its S-1/A filing for Q3 2023, Turo wrote that “8% of the Turo vehicle list is electric vehicles.” That figure has grown to 9% in the latest filing, suggesting that the share of EVs on Turo's platform is growing at a significant rate. Slower supply growth: Touro said in its S-1/A filing for Q3 2023 that it “currently has approximately 350,000 active vehicles listed.” [its] The platform grew 16% year over year. ” In the latest report, that number has increased to 360,000 cases and 12%. If there are more cars, growth will slow down. Rising interest income puts pressure on Turo's Adjusted EBITDA: Turo's interest income increased significantly as interest rates rose, rising from $5.3 million in 2022 to $18.3 million in 2023. However, as the company points out, adjusted EBITDA “does not reflect other income and (expenses).” This is because the company's increased interest-based income has hurt its adjusted profitability. means received. To be clear, we've seen this in other companies as well.
As a reminder, the largest investors in Turo include IAC with 39.2 million shares, venture capital fund G Squared with 16.2 million shares, August Capital with 10.3 million shares; and Canaan Partners, which holds 9.3 million shares.
There will be more when we start roadshows and decide on stock prices.